The Adaptation Fund (AF) was established in 2001 to finance concrete adaptation projects and
programmes in developing country Parties to the Kyoto Protocol that are particularly vulnerable to
the adverse effects of climate change.

In decision
1/CMP.8, the Parties decided that for the second commitment period, the Adaptation Fund shall be
further augmented through a 2 per cent share of the proceeds levied on the first international
transfers of AAUs and the issuance of ERUs for Article 6 projects immediately upon the conversion to
ERUs of AAUs or RMUs previously held by Parties.

Adaptation Fund membership

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Recent developments

Resource mobilization

CMP 9 welcomed the financial contributions that have been made to the AF in 2013 by the Government
of Sweden and the Brussels-Capital Region in Belgium, and the pledges of contributions to the AF made
by the Government of Austria, Belgium, Finland, France, Germany, Norway and Switzerland, which enabled
the AF to achieve its goal of the USD 100 million fundraising by the end of 2013.

After the pledges have surpassed the abovementioned initial fundraising target, the AFB, at its 23rd
meeting in March 2014, set another target for the resource mobilization strategy of USD 80 million per
calendar year in 2014 and 2015 to support the approved projects and programmes. As of December 2014,
Germany has made a pledge of EUR 50 million towards the new target. CMP 10 continued to encourage
Parties included in Annex I to the Convention to provide funding to support the target.

With regard to the revenue streams of the Fund, CMP 9 decided that an account held in the CDM registry
for the AF shall be the recipient of the 2 per cent share of proceeds regarding AAUs and ERUs. Based on
the recommendations from the AFB included in its report to CMP 10, Parties adopted the amendment to the
terms and conditions of services to be provided by the International Bank for Reconstruction and
Development (the World Bank) as trustee for the Adaptation Fund, on an interim basis, which include the
legal arrangements regarding the services for the 2 per cent share of proceeds regarding AAUs and ERUs.
In this regard, CMP 10 requested the AFB to provide further clarity on the effect of the fluctuation of
the price of certified emission reductions and the impact of this fluctuation on the resources
available to the Fund.Second review of the AF

In decision
1/CMP.3, paragraph 33, the CMP decided to undertake a review of all matters relating to the AF,
including the interim institutional arrangements (the secretariat and the trustee) every three years.
Following the initial review of the AF concluded at CMP 8, the CMP decided that the second review
will be undertaken in accordance with the terms of reference contained in the annex to decision
2/CMP.9. In implementing the second review, the CMP requested the AFB to make available in its
report to CMP 10, information on the financial status of the AF, with a view to finalizing the second
review of the AF at the same session.

The CMP also requested the SBI 40 to consider the second review of the AF, with a view to
recommending a draft decision for consideration and adoption at CMP 10. Furthermore, the CMP
requested the secretariat to prepare a technical paper based on the terms of reference contained in
the annex to
decision 2/CMP.9, taking into account the deliberations and conclusions of SBI 40, for
consideration by SBI 41. In this context, the CMP also invited the AFB to provide, in its report to
CMP 10, its views on the matters included in the terms of reference for the second review of the AF.

Based on the deliberations and conclusions made at SBI 40, the technical paper mentioned above and
the views from Parties and the AFB on the second review, CMP 10 requested the AFB to:

Consider options for addressing the diversification of revenue streams of the AF;

Consider, under its readiness programme for climate finance, a) targeted institutional
strengthening strategies to assist developing countries, in particular the least developed countries,
to accredit more national or regional implementing entities to the AF and b) ensuring that accredited
national implementing entities have increased and facilitated access to the AF, including for
small-size projects and programmes;

Consider options for developing operational linkages, as appropriate, between the AF and
constituted bodies under the Convention, taking into consideration the mandates of the respective
bodies;

In this context, COP 20 requested the Standing Committee on Finance, in
decision -/CP.20, to consider issues related to possible future institutional linkages and
relations between the AF and other institutions under the Convention.

In addition, CMP 10 decided to extend to June 2017 the interim arrangements with the AFB secretariat
and the AF trustee, with a view to further consideration by the CMP of options for permanent
institutional arrangements for the secretariat and the trustee. Furthermore, the CMP requested the
SBI to initiate the third review of the AF at its forty-fourth session in 2016, with a view to the
review being undertaken by CMP 13 in 2017.